“Heavenly Creatures” lets you in on its terrible secret right away. In the opening scene of this compelling New Zealand drama, two teenage girls—covered in blood—are seen racing through a wooded area in a hysterical panic. The sequence ends abruptly and isn’t returned to until the finale. But it hangs over everything like a sword of Damocles as this hypnotic saga of adolescent obsession, innocence and murder unfolds.

Most New Zealanders are familiar with the real story behind “Heavenly Creatures.” In the 1950s, schoolgirls Pauline Parker and Juliet Hulme were brought up before the Christchurch authorities for the murder of Pauline’s mother. After undergoing a tabloid-stoked circus trial, the girls were ordered never to see each other again. It was the ultimate parental punishment, doled out by a judicial body.

Informed by court transcripts of the period, interviews with key witnesses and the extensive diaries Parker kept, filmmaker Peter Jackson observes events solely from the girls’ fantasy-based point of view. “Heavenly Creatures” has the unsettling appearance of having been created by the girls themselves. It’s a pathologically autobiographical fairy tale.

In the movie, subdued ninth-grader Pauline (Melanie Lynskey) experiences a transformation when perky English student Juliet (Kate Winslet) enters her repressive girls school. Juliet’s intelligent, exuberant air—she begins by correcting her French teacher in matters of grammar—marks her as a rebel. When the two girls regularly sit out gym class (Juliet for tubercular ill health and Pauline as the result of childhood operations on her leg), they’re bonded forever.

Realizing they have mutual interests as writers, the girls invent their own fantasy universe, where medieval characters live in a mythical kingdom called Borovnia. The girls giddily create stories of sexual escapades and murderous revenge, even giving each other fictional names. Inevitably, their private relationship provokes misunderstanding, resentment and growing resistance from their elders. When Juliet’s divorcing parents decide it’s time to ship their ailing daughter to her aunt in South Africa, the friends make plans to live abroad together. And when Pauline’s mother rejects her daughter’s request to follow Juliet, everyone’s macabre destiny is sealed.

Jackson (who wrote the script with Frances Walsh) evokes the girls’ fantasy world with scenes featuring plasticene figures, creating an eerie, metaphysical dimension to the movie. There is simply no way to dispute Borovnia’s existence. It’s there—in living animation—right in front of you. But all the clay-kneading in the world would be useless without believable human performances. Diana Kent (as Juliet’s mother), Sarah Peirse and Simon O’Connor (Pauline’s parents) are appropriately bewildered and understandable in their distanced adult roles. But the best of all comes from the central duo. As Juliet, Winslet is a bright-eyed ball of fire, lighting up every scene she’s in. She’s offset perfectly by Lynskey, whose quietly smoldering Pauline completes the delicate, dangerous partnership. Their bond is so strong, all attempts to destroy it are as awesomely foolhardy as splitting the atom.